India’s economy defied expectations on Tuesday to retain the title of the world’s fastest-growing major economy, despite the disruption caused by Prime Minister Narendra Modi’s demonetisationdecision+ .

Gross domestic product (GDP) registered 7 per cent growth in October-December quarter, down from 7.4 per cent in the previous quarter.

India’s growth was higher than China’s 6.8 per cent for the last three months of 2016.

The federal statistics office retained its growth forecast for the fiscal year ending in March 2017 at 7.1 per cent.

The figures surprised economists, who had expected the economy to take a bigger hit from government’s decision last November to demonetise old 500 rupee and 1,000 rupee banknotes, taking out 86 per cent of the currency in circulation virtually overnight.

“Perhaps this data is not capturing the impact of demonetization,” said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance Co.

“I am totally surprised and stunned to see this number … I believe that, with a lag, we will see an impact on GDP numbers.”

The data also backs the central bank’s assessment, which all along maintained the economic disruption caused by Modi’s shock monetary therapy as a transitory phenomenon.

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